Economic and policy analysis on air and rail transport

This dissertation focuses on two major topics in air and rail transportation. The first one is related to various aspects of interactions between airlines and high-speed rail (HSR). We first analyze the effects of cooperation between a hub-and-spoke airline and an HSR operator when the hub airport may be capacity-constrained (Chapter 2). We find that, as compared to the case of modal competition, such cooperation may increase or decrease social welfare, depending on modal substitutability and hub capacity. Then we study the impact of air-HSR competition on the environment and welfare (Chapter 3). We show that the introduction of HSR, even if it is more environmentally friendly than airlines on a per-seat basis, may have a net negative effect on the environment and social welfare. Lastly we investigate the long-term impacts of HSR competition on airlines (Chapter 4). We find that when HSR enters the trunk routes or increases its competitiveness, an airline will have a greater incentive to cover more regional (foreign) markets and move towards hub-and spoke network if the trunk market is larger. The second topic is related to the strategic coalitions among airlines. First we analyze the partnership formation for two competing local airlines and two global alliances (Chapter 5). We find that the equilibrium outcome depends on whether they play in a simultaneous game or a sequential game. Then we examine the strategic vertical relationship between network and regional airlines (Chapter 6). We develop a model to illustrate how network airlines can use the contractual relationship with regional airlines as an efficient tool to simultaneously drive out inefficient network airlines and also accommodate other cost efficient network airlines in any specific market. The model is tested on U.S. data using simultaneous and sequential choice models. Finally, major results of the thesis and future research directions are discussed (Chapter 7). In particular, we propose to study the general impacts of HSR projects on an economy, including urban development as well as the positive spillovers of HSR technology.Business, Sauder School ofGraduat